| India's immensely traditional and cultural past is instrumental for its vast textile heritage, where each state (and sometimes districts) of India has its own unique native costume and traditional attire. While traditional clothes are still worn in most of rural India, urban India is catching on to global trends fast. Fashion in India is still in its nascent stage and has not quite evolved like the more fashion industry in European countries. However India and Indian fashion has captured the imagination of all, the world over. From bindis to mehendi to kurtis and chikan kaari India is the new IT.
Fashion in India is a growing industry with international events such as the India Fashion Week and annual shows by fashion designers in the major cities of India. The victories of a number of Indian beauty queens in International events such as the Miss World and Miss Universe contests have also made Indian models recognized worldwide. Fashion designers such as Ritu Kumar, Ritu Beri, Rohit Bal, Rina Dhaka, Muzaffar Ali, Satya Paul, Abraham and Thakore, Tarun Tahiliani, JJ Valaya and Manish Malhotra are some of the well known fashion designers in India.
Despite the brouhaha about the Indian fashion industry the media attention on the Indian fashion garments has not actually translated to tangible returns.
The Lakme-sponsored India Fashion Week (IFW), held in April this year hailed of good looks, glamour and glitz in the fast-changing world of the Rs20, 000-crore Indian apparel industry. As the most important event of the Indian fashion industry, the economic prospects, revenues and profitability proffered by such an event need to be evaluated.
The first IFW was orchestrated by the Fashion Design Council of India (FDCI) in August 2000. Ever since, the event not only exhibits the work of Indian designers but also promotes the fashion industry at large, within the country and overseas.
The end of the quota regime as on January 1, 2005, signifies brightened vistas for the Indian apparel industry. A quota-free era forebodes growth in the textile business for countries such as India and its larger rival China. Both countries are one of the forerunners in the world garment and textile market.
The quota regime limited free export of materials and garments from the developing countries, and provide a rather unfair edge to the developed ones, such as the US. The multi-fiber agreement (MFA) designed to protect textile producers in the industrial West from being swamped by low cost suppliers of the developing countries. The regime resulted in unfair trade practices, such as hoarding of licenses for quotas and their eventual sale in the black market, dumping, and exporting goods of inferior quality to meet contractual obligations. Thus there was little or no incentive for the manufacturers to upgrade and improve either their products or manufacturing processes.
The World Trade Organization Agreement on Textiles and Clothing (ATC) concluded the quota regime on January 1, 2005. The ATC is designated to incorporate the textile sector into the mainstream of multilateral rules, as applicable to other sectors. The end of the quota regime signifies the potential for widespread growth for the fashion industries of all the countries that had faced quota restrictions earlier.
The Indian fashion industry has an edge over other countries as far as its growth prospects are concerned. The Indian textile industry clearly has many advantages. India is one of the biggest cotton producers in the world, it has a huge market, which creates the opportunity to exploit economies of scale, it has cheap skilled labor, and it has plenty of design skills. Still, the country's garment industry suffers from many structural weaknesses, unlike China's.
Till some time ago Indian law decreed that garment manufacturing should remain a small-scale activity. The consequence: even today 80 per cent of the country's garment makers operate from tiny outfits with less than 20 machines per unit. A 2003 survey by the Confederation of Indian Industry, Introspecting Competitiveness of the Textile Sector, revealed that only 20 per cent of the manufacturers in the Rs28, 000 crore garment sector (with seven million workers) constitute the organized sector. Currently, three-fourths of the readymade garment exports, according to CMAI, are to the quota countries.
India is the third-largest cotton producing country in the world and also possesses an abundance of talented designers. Yet, the potential of the country's fashion industry remain unrealized.
A study conducted by the management consultants KPMG expects the Indian fashion industry to grow from its current net worth of Rs180 crore to Rs1,000 crore within the next decade. Currently, the global designer wear market is estimated at $35 billion, with a 9 per cent growth rate. The Indian fashion industry contributes a mere 0.1 per cent of the international industry's net worth. According to estimates, the total apparel market in India is estimated at around Rs20, 000 crore. The branded apparel market's size is about a fourth of this at about Rs5, 000 crore. Designer wear, in turn, comprises just about 0.2 per cent of the branded apparel market.
The highest sales turnover within the designer wear segment currently is Rs25 crore, with other established names having smaller returns of Rs10-15 crore. Considering the potential of the Indian fashion industry for growth, the figures are not particularly favorable.
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